Friday, April 11, 2008

After a year-long province-wide debate on royalties, which included a high-profile royalty review panel, Tory Premier Ed Stelmach stayed steady on his promise that Albertans would get their "fair share" from the royalties collected from oil and gas exploitation. With Fort McMurray and the Tar Sands booming, Ed Stelmach led his steady fight against the evil dogs of looney environmentalism and the socialist opposition on the left who claimed the royalties increase was just not enough, and hard-line free market wing-nut ideologues on the right who screamed that the increase was too much. Ed Stelmach stayed steady. The increase was just enough, Albertans deserved their fair share, and Ed Stelmach was going to stay steady to make sure they got it.

Ed Stelmach was steady as he not only steered steadfast with his royalty plan into 2008, but also had the courage to stand up for his new royalty plan by launching it in front of Albertans during a General Election. On March 3, 2008, Albertans got up and cast their ballots for Ed Stelmach, endorsing his new royalty plan. Much rejoicing was seen in the streets. Ed Stelmach has achieved his new majority. A mandate and an approval of his plan.

Now, with an enlarged caucus and Spring Session of the Alberta Legislature beginning next week, Ed Stelmach is staying steady by not changing his steady plan, but steering his steadfast plan on another steady path. Ed Stelmach has the courage to do what's right and won't let small things like year-long debates, campaign promises, and election results get in the way of his steady plans.

CALGARY - The Alberta government is giving oil and gas producers a $1-billion break on royalties over the next five years in a bid to attract investment it fears is being chased away.

Energy Minister Mel Knight revealed in Calgary on Thursday that the province has tweaked the new royalty regime to address the "unintended consequences" of its plan announced in October.

The government was assailed over that plan, set to take effect next year. The energy sector charged it made some oil and gas plays uneconomical, while opposition critics contended it shortchanged Albertans on resource riches.

"These (new) programs will help generate hundreds of millions of dollars in royalties and countless new jobs for decades," Knight said.

There, Dave, one off-topic nuisance troll dealt with (at least for a few days). You can thank me later.

You know, I had really thought this premier would be different from the semi-retarded dry drunk we had for the previous 13 years, but they haven't even sat their asses down in the leg before breaking their first promise.

As tjk noted and b_nichol conveniently forgot, the royalty adjustment was exactly in keeping what was widely spelled out before the election - that the government would look at "unintended consequences" of the royalty decision, and tweak as necessary.

Maybe do a little research next time, and figure out the value of this "break" - which only applies to very deep exploratory (not development) oil wells, and to very deep exploratory and development gas wells - and compare it to total royalties forecast to be collected. Pretty small potatoes against total royalties collected, and since these are the highest cost and highest risk wells to drill, this is one rare example where I would take industry's complaint seriously. These wells would simply not be drilled under most price scenarios (gas, particularly).

Maybe in your next post, you should detail how the Liberals avoided losing nearly 11% of their caucus when Blakeman was not given the nod for Speaker.

By the way, nice to see you are "governing yourself accordinly" now. Appreciate it.

I may be having trouble with the whole "royalty" definition; if there is a 5-year holiday on royalties for deep oil and gas wells, how could they anything but production wells. Exploratory wells would not generate gas or oil, therefore would not generate revenue, and therefore would not be subject to royalties. The original regime had royalty holidays for more expensive deep-well production sites, and charged more for shallow, high-production wells. By far the most disturbing aspect is the consultation process (or lack thereof). As far as I can tell, any semblance of the entire consultation process from last year was thrown out the window, and once again, we have a government that absolutely refuses to debate important matters of public interest in the legislature (you remember, that building that houses our elected representatives). I guess Klein's rules of governance still apply.

Yes, you are having a little problem with the royalty definition. Exploratory wells do (hopefully) produce oil or gas, but the classification of exploratory versus development depends on the level of development of a particular play type. For an admittedly simple example, if you are drilling a new well targeting a specific formation in an area that has not been drilled before, it is more likely to be classed as an exploratory well. If you are putting yet another hole in the ground in an area and formation that is already known to contain commercial quantities of hydrocarbons, it is likely going to be classed as a development well.

Development wells are therefore a lot less risky. They also qualify for less attractive tax deductions (the cost of exploratory wells can be written off quite rapidly). As a producer, you are hopeful that both types of wells actually produce.

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Who is Dave Cournoyer? I am a writer, blogger, communicator, occasional media pundit, political watcher, & proud life-long Albertan. I studied Political Science at the University of Alberta and have served as Vice-President (External) of the U of A Students' Union, Chair of the Council of Alberta University Students, and communications coordinator for Alberta's official opposition party.